In brief
- One year on from the introduction of the revised model form Freezing Order, ambiguities remain that merit further consideration
- In particular, the Babanaft proviso continues to employ language that does not bear its ostensible meaning, and the legal expenses exception creates uncertainty in multi-jurisdictional fraud cases
- Further revision of the model form would ensure that respondents and third parties can readily understand their obligations and potential liabilities, and avoid satellite litigation
- Until then, practitioners should ensure that recipients of freezing orders are clearly apprised of potential liabilities that may not be apparent from the wording of the order itself
The Babanaft problem
The Babanaft proviso, a longstanding feature of freezing orders, provides that a freezing order "does not affect or concern anyone outside the jurisdiction" of the English court. On its face, this language appears to offer blanket protection to foreign third parties. However, the true position is more nuanced and could leave such parties exposed.
The Court of Appeal in Lakatamia Shipping Co Ltd v Su [2025] EWCA Civ 1389 confirmed that the Babanaft proviso limits only the court's contempt jurisdiction, and not the broader reach of civil liability, and held that the Supreme Court's decision in JSC BTA Bank v Ablyazov (No 14) [2018] UKSC 19 constituted binding authority for the proposition that the Babanaft proviso affords no defence to civil claims in conspiracy, where third parties have facilitated breaches of freezing orders. Therefore, whilst foreign non-parties are shielded from penal sanctions, they remain exposed to civil claims.
It is notable that the first instance judge in Lakatamia reached the opposite view. If even experienced members of the judiciary can construe the proviso as conferring blanket protection, it is difficult to see how foreign third parties, particularly those with no familiarity with English law, could reasonably be expected to appreciate the distinction.
There is a strong case for amending the model form to make the limitations of the Babanaft protection clear on its face, so that foreign third parties can properly understand the scope of their potential exposure. The alternatives are for practitioners to seek an amendment to the proviso on a case-by-case basis, or to ensure that when serving the order on foreign third parties, the accompanying correspondence expressly addresses the scope of potential liability. However, neither alternative is wholly satisfactory, primarily because both depend on individual approaches and leave scope for inconsistency. The better course is to amend the model form itself, so that the position is clear on the face of every freezing order, without the need for supplementary explanation. After all, there is a clear imperative to limit ambiguity in these types of orders.
Asset Disclosure: a qualified success
The revised model form has been more successful in providing clarity in the area of asset disclosure. It now clarifies that the 'value' of an asset means the "market value (ignoring charges or other security)", with details of charges to be disclosed separately. This follows the Court of Appeal decision in ADM International SARL v Grain House International SA & Anor [2024] EWCA Civ 33 in which Lord Justice Popplewell had highlighted that "as a matter of ordinary language, reference simply to the value of real property would normally be understood to mean market value". This is a sensible amendment that strikes an appropriate balance: it reflects how ordinary respondents naturally think of value, whilst the separate disclosure of charges ensures that claimants retain the information necessary to assess the true enforcement value of the asset. In that respect, it represents a genuine improvement in both clarity and practical utility.
Notwithstanding that improvement, there remain practical questions on which the model form could usefully provide greater clarity. In particular, it should clarify the timeframe within which disclosed values should be assessed (a point which is currently ambiguous in volatile asset markets like cryptocurrency) and specify whether respondents must update their asset disclosure if values materially change during the life of the order. Addressing these points would reduce the scope for misunderstanding and satellite litigation, and ensure that freezing orders remain an effective tool in increasingly complex and fast-moving asset markets.
Legal expenses: an unresolved ambiguity
A further area in which the revised model form could provide greater clarity concerns legal expenses. The new model order provides that the exception for legal expenses can be limited to those "relating to the proceedings". But in large civil fraud cases, it is not unusual to see proceedings commenced in multiple jurisdictions, often by the claimant with the benefit of a freezing order. The question of whether expenses incurred in connected foreign proceedings fall within the exception is one that respondents need to be able to answer with confidence.
As matters stand, the optional language (limiting the exception to legal expenses "related to the proceedings") when read with the accompanying footnote, leaves it highly questionable as to whether connected proceedings would fall within the exception. This ambiguity creates a trap for defendants and uncertainty for practitioners, with some forced to choose between defending themselves properly across connected proceedings or risking contempt. Clarification of this point – whether in the model form itself or in accompanying guidance – is needed to ensure that respondents can ascertain the scope of the exception without recourse to satellite litigation.
Conclusion
The revised model form freezing order was introduced as part of the project to simplify CPR 25, which in turn formed part of the CPR Committee's wider simplification programme. That project is committed to making the CPR as clear, simple and concise as possible. Nowhere is the need for clarity more critical than in the body of the model form for what is widely described as one of the most draconian orders available. Whether it falls within the remit of the existing programme, or as a separate project, there is a clear case for review. The ambiguities around the Babanaft proviso appear to be particularly problematic; respondents and foreign third parties cannot reasonably be expected to understand their position when the model form states words that do not bear their ostensible meaning. The proviso should be amended to clarify that it applies only to contempt proceedings, not tortious liability. Coupled with clarification on multi-jurisdictional legal expenses and asset disclosure, these changes would prevent costly satellite litigation and restore proper balance between enforcement and procedural fairness.